National home sales down slightly but Greater Golden Horseshoe prices holding their own

Oct. 15, 2018

National home sales edged down 0.4 per cent between August and September, the first decline since April, according to the Canadian Real Estate Association (CREA). While sales activity is still somewhat stronger compared to the first half of the year, it remains well below most other months since 2014.

Sales declined from August to September in slightly more than half of all local markets, led by Vancouver Island and Edmonton, along with several markets in Ontario’s Greater Golden Horseshoe (GGH) region. Activity declines in these markets were offset by monthly gains in the Fraser Valley and Montreal.

About 70 per cent of local markets were down on a year-over-year basis, led primarily by declines in major urban centres in British Columbia, along with Calgary, Edmonton and Winnipeg.

MORTGAGE STRESS TEST

“The balance between the number of homebuyers and suitable homes varies depending on location, housing type and price range,” says CREA President Barb Sukkau. “Differences in market balance will likely come into sharper focus as interest rates rise and cause this year’s new mortgage stress test to become even more restrictive.”

The number of newly listed homes rose three per cent between August and September, led by the Lower Mainland and the GTA. More than half of all local markets posted a monthly increase in new listings.

“Sales activity may get all the press, but it’s the balance between that and the number of homes for sale that sets the tone for pricing environment,” says Gregory Klump, CREA’s chief economist. “In markets with an abundant supply of homes and slower sales activity, buyers have the upper hand when it comes to negotiations over price. However, in places where buyers are keen to make a purchase but there’s a shortage of homes for sale, sellers are in the driver’s seat when it comes to price. It will be interesting to see how supply and demand respond to rising interest rates amid this year’s new mortgage stress-test.”

Based on a comparison of the sales-to-new listings ratio with the long-term average, about three-quarters of all local markets were in balanced market territory in September 2018.

The Aggregate Composite MLS Home Price Index (HPI) was up 2.3 per cent year-over-year in September – in line with those posted in each of the two previous months.

Condo units posted the largest year-over-year price gains in September (8.4 per cent), followed by townhomes (4.5 per cent). Meanwhile, one-storey and two-storey single-family home prices were little changed on a year-over-year basis.

REGIONAL VARIATION

Trends continue to vary widely among the 17 housing markets tracked by the HPI. Among the markets in the GGH, home prices were up from year-ago levels in Guelph (eight per cent), Hamilton-Burlington (6.1 per cent), the Niagara Region (5.9 per cent), the GTA (two per cent), and Oakville-Milton (1.4 per cent). By contrast, home prices slipped lower in Barrie and District (-3.6 per cent).

In BC, home price gains are diminishing on a year-over-year basis in Greater Vancouver (2.2 per cent), and Fraser Valley (8.5 per cent). Meanwhile, prices in Victoria were up 8.7 per cent year-over-year in September, and elsewhere Vancouver Island they climbed 13.2 per cent.

Across the Prairies, benchmark home prices remained below year-ago levels in Calgary (-2.6 per cent), Edmonton (-2.6 per cent), Regina (-4.7 per cent) and Saskatoon(-1.9 per cent).

Home prices rose by 6.9 per cent in Ottawa (led by an 7.9 per cent increase in two-storey single family home prices), by 6.1 per cent in Greater Montreal (led by a seven-per-cent increase in townhome prices) and by 3.4 per cent in Greater Moncton (led by a 10.3 per cent increase in condo prices).

The actual (not seasonally adjusted) national average price for homes sold in September 2018 was slightly less than $487,000, up just 0.2 per cent from the same month last year.

The national average price is heavily skewed by sales in the GVA and GTA, two of Canada’s most active and expensive markets. Excluding these two markets from calculations cuts almost $104,000 from the national average price, trimming it to just over $383,000.

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